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New Establishment Bonanza: Bono Unites Universal and Google

In a boon for Universal Music Group—and C.E.O. Doug Morris (right), No. 96 on the New Establishment—it was announced late last week that the company was entering into a deal with YouTube and its owner, Google, to create Vevo, an online music-video hub for people, content owners, and advertisers that will feature Universal artists. Users will be able to access the service via a YouTube channel; later this year a separate Web site (powered by YouTube technology) will also launch.

This is a landmark event, given the weak state of the music industry and its combative relationship with YouTube. Music videos are one of the most popular features on the video-sharing Web site, but record labels often have the videos pulled over licensing issues. Vevo, which those involved have likened to an Internet MTV (that is, when the cable channel actually played videos), will allow Universal to collect half of the money brought in by ads run on the site. The move to create the site reflects a clear decision to view music videos as a revenue stream instead of as a marketing device employed to sell albums. With album sales continuing to drop (45 percent since 2000), music companies need to be thinking outside the box. Vevo will also offer links that will allow viewers to buy the music straight from iTunes. (Universal will receive a cut of these sales, too.)

Obviously, Universal is very enthusiastic about Vevo. A spokesperson for the company told VF.com, "It's the next step in our approach to videos. Our approach started back in 2004, when Doug was the first to take what was essentially a promotional tool—videos—and monetize them into a new and significant revenue stream for the company. Not long after, all of the other majors followed suit. So while we successfully monetized user-generated content, the next step was to develop a model to fully monetize premium video content. Hulu did this for television; we are now doing it for music." In a nutshell, Vevo is looking to be the ultimate destination for music videos—and profit from it. And what about those rumors of Morris reaching out to rival record labels to get their content on Vevo, too? U.M.G. confirmed that there have been talks and added that U.M.G. would love to get independent labels on board as well.

And in an inter–New Establishment twist, we learned that it was Bono (No. 36) who initiated the meetings between Universal and Google. Concerned about the future of the music business, Bono urged Morris to meet with Google C.E.O. Eric Schmidt (No. 3) to brainstorm possible partnerships for advertising. Bono's good deed wasn't motivated solely by altruism, though. As a Universal artist, he does have a vested interest in the company's well being.